BELARUS NEWS AND ANALYSIS

DATE:

03/08/2007

Belarus buys one week's respite in Russia gas row

By Gennady Novik

REUTERS

MOSCOW - Belarus avoided an immediate cut in its gas supplies on Friday, by repaying part of its debt to Moscow, but Russia warned Minsk to pay up in full within a week or see its flow of the fuel reduced by 30 percent.

Belarus pipeline firm Beltransgas said in Minsk, around the time that Moscow's 10.00 a.m. (0600 GMT) deadline was expiring, that it had paid $190 million out of the $456 million it owes to Russian gas export monopoly Gazprom.

Gazprom had said it would halve supplies to Belarus if the debt was not settled by then.

"We see real steps from the Belarussian side to settle the debt problem. So we decided not to cut today. But we expect a full debt repayment as well as payment in full for new supplies," Gazprom spokesman Sergei Kupriyanov told Reuters Television.

Kupriyanov later said that supplies would fall by 30 percent should Belarus miss the new deadline of Aug. 10, reflecting the outstanding amount owed by Minsk.

Gazprom's threat sent jitters across Europe. It echoed previous disputes between Russia and the neighbours across which its exports are piped, Belarus and Ukraine, which caused gas and oil supply cuts to Europe in the past three winters.

The disputes have underlined the continent's heavy dependence on Russian energy.

The European Commission hailed Gazprom's agreement with Belarus and cancelled an earlier planned emergency meeting of its natural gas market experts.

ENERGY BLACKMAIL?

Belarus President Alexander Lukashenko promised on Thursday to repay the debt but accused Russia of trying to take over his country' economy. He has alleged Russia is using the gas debt to pressure Belarus into selling its most profitable industrial assets to firms like Gazprom.

Russian Foreign Minister Sergei Lavrov said the Kremlin was not using oil and gas exports to blackmail neighbours.

"This is simply not true. We have never ever violated a single obligation to countries who import our energy," Lavrov told business executives in the Philippines capital Manila.

"I challenge all those who accuse us of energy blackmail to present a single fact to the contrary."

A delegation from Belarus rushed to Moscow on Thursday evening and talks continued throughout the night until Gazprom said it had received the first tranche of the debt payment and would postpone the gas cuts.

Analysts said the compromise was a positive development, but disputes with Belarus were occurring too often. "This is an indication that only Gazprom's ultimatums can help it to recover debts from some of its customers," Deutsche UFG said on a note.

ENOUGH RESOURCES TO PAY

Lukashenko, described by the United States as Europe's last dictator, said on Thursday Belarus would draw on its limited financial reserves to repay the debt.

Gazprom doubled gas prices for Belarus to $100 per 1,000 cubic metres from January, but allowed the country to pay only half the price in the first six months. It charges its European client over $250 per 1,000 cubic metres.

Analysts have said Belarus can just about pay the full price after having its gas supplies subsidised by Moscow for years, but they also note that it is running external deficits that need to be financed either with borrowing or inward investment.

Minsk recently received a $625 million payment from Gazprom for a stake in Beltransgas, in the first tranche of a four-year deal through which the Russian gas monopoly will acquire half of Beltransgas. Many Belarussian politicians still oppose the sale.

Source:

http://www.signonsandiego.com/news/business/20070803-0725-gazprom-belarus-settlement.html

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